Caterpillar Inc (CAT) CFO Andrew Bonfield at Evercore ISI Industrial Conference (Transcript)

Caterpillar Inc (NYSE:CAT) Conference Call Summary Company Overview - Company: Caterpillar Inc - Date: March 2, 2021 - Participants: - Jennifer Driscoll - Director of Investor Relations - Andrew Bonfield - CFO Key Points Financial Performance - Sales and Revenues: $41.7 billion, down 22% year-on-year [4] - Adjusted Operating Margins: 11.8%, down 400 basis points due to lower volume and unfavorable pricing [4] - Profit per Share: - Down to $5.46 (adjusted profit per share) [4] - Restructuring profit per share: $6.56 [4] - Free Cash Flow: Returned 110% of ME&T free cash flow to shareholders over the last three years, retiring approximately 10% of average shares [4] Market Segments - Services Revenue: Represented about 41% of total ME&T sales, although down year-on-year [6] - Sales Decline: All three segments saw sales down by over 20% [6] - New Product Launch: Launched GX excavators in China, targeting utility-type customers [7][8] Investment and R&D - Investment in Business: Continued investment in R&D despite pandemic challenges [9] - Focus on Electrification and Hydrogen Technologies: Significant investments in these areas, including a Clean Air Excellence Award for Dynamic Gas Blending engine [10][11] Operational Excellence - Operational Focus: Emphasis on improving efficiency and reducing procurement costs [12][14] - Restructuring: Sale of marine propulsion business and restructuring of longwall mining and hydraulic mining shovels businesses [13] Market Outlook - Upcycle Capacity: Sufficient capacity for the upcoming upcycle, with modest CapEx needs anticipated [16] - Cash Generation: Generated $3.1 billion in cash flow during a down year, indicating strong cash generation ability [17] - Revenue and EPS Growth: Historical framework suggests revenues could more than double and EPS could triple in a recovery cycle [19][21] Strategic Acquisitions - M&A Strategy: Focus on opportunistic acquisitions aligned with market conditions and strategic goals, including technology and services [26][28] - Recent Acquisition: Acquired Marble Robotics to enhance capabilities in autonomy within mining [28] Autonomy and Technology - Growing Interest in Autonomy: Increased conversations with Tier 1 miners regarding autonomous solutions [38] - Challenges in Retrofitting: Existing mines face challenges in retrofitting for autonomy due to infrastructure needs [39] ESG and Future Investments - Commitment to ESG: Investments in technologies that reduce emissions and improve sustainability [10][11] - Future Technology Focus: Open to acquiring technologies that enhance competitive advantage, particularly in electrification [34][35] Conclusion - Positive Outlook for 2021: Expectations for a positive year ahead, with a focus on meeting demand and managing supply effectively [45] This summary encapsulates the key insights from the conference call, highlighting Caterpillar's financial performance, market strategies, and future outlook.